Here's Why We Think The Cigna Group's (NYSE:CI) CEO Compensation Looks Fair for the time being

Key Insights

• Cigna Group will host its Annual General Meeting on 24th of April
• Total pay for CEO David Cordani includes US$1.50m salary
• The total compensation is similar to the average for the industry
• Cigna Group's total shareholder return over the past three years was 44% while its EPS was down 7.7% over the past three years

Despite strong share price growth of 44% for The Cigna Group (NYSE:CI) over the last few years, earnings growth has been disappointing, which suggests something is amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 24th of April. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

View our latest analysis for Cigna Group

Comparing The Cigna Group's CEO Compensation With The Industry

At the time of writing, our data shows that The Cigna Group has a market capitalization of US$98b, and reported total annual CEO compensation of US$21m for the year to December 2023. That's mostly flat as compared to the prior year's compensation. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.5m.

For comparison, other companies in the American Healthcare industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$18m. So it looks like Cigna Group compensates David Cordani in line with the median for the industry. Moreover, David Cordani also holds US$212m worth of Cigna Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	US$1.5m	US$1.5m	7%
Other	US$20m	US$19m	93%
Total Compensation	US$21m	US$21m	100%

On an industry level, around 17% of total compensation represents salary and 83% is other remuneration. It's interesting to note that Cigna Group allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

The Cigna Group's Growth

The Cigna Group has reduced its earnings per share by 7.7% a year over the last three years. In the last year, its revenue is up 8.4%.

Few shareholders would be pleased to read that EPS have declined. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has The Cigna Group Been A Good Investment?

Boasting a total shareholder return of 44% over three years, The Cigna Group has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 2 warning signs for Cigna Group that you should be aware of before investing.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.